The former session kept the currency market layout unchangeable as the US Dollar held on strengthening to both the Euro and British Pound. The Yen’s setup was less systematic. The “buck” sagged just after the initial strengthening, and that was an extra ground speaking about the low degree of the investors’ inclination to risk. The downgrading pressure on the European currencies was also provided with the apprehensions of the negative economic effect of the austerity measures aimed at great budgeting deficits’ shortage. As known, the governments of Portugal and Spain declared the sudden cutting of their expenses just after the Greek authorities had made the same. That will certainly keep down the business activity within this region. As a result, the US Dollar fixed the steady “profit” at the Thursday session. However, the gains to the GB Pound turned out to be more impressive than to the Euro this time again. There wasn’t much data on the economy of the USA. The attention focused on the last week number of the preliminary jobless claims in the USA. As stated, this indicator lowered down a bit. Moreover, the decline of this index has already been observed for the fourth week running amidst the ongoing slow improvement of the labor market. The preliminary jobless claims lessened for 4 000 till 444 000. The today news set is more intensive. The US retails sales for April will be in the focus of attention. The raise for 0.3% m/m s predicted, and that confirms the slow of the advance tempos as the previous value was +1.9% m/m. Besides, the University of Michigan consumer sentiment index will also excite interest due to its positive dynamics – 73.5 after 72.2. The April data on the industrial production may also gladden with the presumed impressive growth for 0.6% since after +0.1%. If being proved these recent US economic data hold on pointing out the recovery. Certainly, that supports the US Dollar and will favor the keeping of its leading positions at the market. Though, the technical factors urge caution due to the powerful supports, whereto the European currencies tumbled, and the attractiveness of the profit fixation, which may cause the US Dollar sales-offs during the current session.

   Obviously, the lack of inflow into the negative attitude to the Euro slightly weakened the pressure on the common currency, which was sold-off less intensively than the GB Pound, despite the Euro was tumbling against the US Dollar on Thursday. Nevertheless, the losses of the common currency made another 100 points to the “buck” at the last session. There was no EU economic statistics. As for the political component, the European Central Bank’s criticism of the international rating agencies is worth of attention. L. Binny Smuggy, one of the chief Members of Governing Council of ECB leveled a blast at the rating agencies. He stated that they had run out of credit as their estimation weren’t always independent and provided the market procyclicality. Moreover, there was also an appeal not to take into account the rating agencies’ evaluations. As it’s seen, the financial regulators are currently changing their attitude: when the default broke out in 2008 the rating agencies were accused of needless allegiance of their estimations, but now the currently demonstrated severity is accepted in an opposite manner. The EU news background is again empty today. The Euro is still under the influence of the same negative attitude to it; however, it may get the technical support as the check of the recent minimum at 1.2520/15 for the pair of EUR/USD can afford grounds for the upward bounce within the profit fixation. It means, there’re risks for the short-term Euro’s strengthen.

   The current exertion due to the political uncertainty in Great Britain goes ahead pressing on the Sterling. This currency lost 200 points to the US Dollar at the yesterday trades. The decision of the Tory and Liberal-Democrats to form a coalition cabinet, which had supported the Sterling in the very beginning, just after its pronouncement, obviously transferred its influence to the market already. So now the investors are betting for the problems of the new state authorities. Apparently, the most important thing is the awareness that the mission on budgeting expenses’ shortage is difficult and may instigate the slowdown of the economic recovery by all means. That’s why the GB Pound incurs to massive sales-offs. Furthermore, the Thursday published economic data afforded grounds for downtrend of the Sterling’s popularity. The hopes for the British Pound’s derogation will provide a significant support to the economy of Great Britain likely fail to come true. The official data on the foreign trading demonstrated a rapid increase of the British trading balance deficit in March, till 7.5 Billion compared to 6.3 Billion of pound in February. The forecasts predicted a slight raise of deficit, till 6.6 Billion of pound. This information provided extra pressure on the Sterling. So the good data on the consumer confidence and home prices n Great Britain haven’t been taken into account at the market yet. Nothing special as for the economy of the “Isles” is going to be published today. The GB Pound will probably have repercussions of the same influencing factors that were at the former sessions as well, and so the Sterling may tumble to the US Dollar again. Meanwhile, it’s reasonable to take into account the probable fixation of profit. The accomplishment of this scenario will reason the cease of decline and support the British currency for the short haul.

   The currency of Japan holds on keeping within tight range to the US Dollar. The initial advance of the “buck” at the last session thanks to the raise of the US profitability changed into tumbling, when the inclination to risk fell under the attacks amidst the stock market meltdown. As a result, the Yen closed with gain to the US Dollar, but within the shaped lateral corridor. The current session will probably provide no changes as for the investors’ strategies for the pair of USD/JPY, because the significant statistics will be published neither in the USA nor in Japan. The fundamental changes may show up only in case of any extraordinary information. In the meantime, the pair’s trading still keeps within the price range of 93.40-92.20, as it’s seen.

Analysis prepared by:

Arkady Nagiev
Forex4you analyst